Saturday 6 March 2021

The Voice - Consumer's Voice

Can I be cleared?

I would like to enquire if you can assist me to get ITC clearance, after settling full payment of the account.

I have fully paid a furniture store account on December 2020, which was handed to some debt collectors. Still to date I find my name listed under ITC. I trying to seek help from the debt collectors, there's no assistance. What do I do?

The most important thing you can do is to keep talking.

Credit reference bureaux like TransUnion and the others make money by holding records of customers and their debts that they can share with other potential lenders. Lenders like banks, micro-lenders and furniture stores pay these bureaux to record and then share our data so they can all lend money more carefully.

Are they allowed to do this? Yes, 100% they are. They can do this because we said they can. Hidden in our loan agreements, hire purchase contracts or credit agreements is a clause saying that if we fail to pay our instalments then they can register this with these credit reference companies. If you don't believe me then go and check your contracts right now. It's true.

The good news for the future is that the new Data Protection Act will force these companies to be much more open about this and will force them to allow us to see what the hold on us. However, despite being a very powerful piece of law, it's still not enforceable (Government, what are you doing about this?).

Another bit of good news is that credit reference bureaux do a good job for the majority of people who pay their debts carefully and without problems. They make it easier for these people to get loans because lenders can see who is most likely to be an easy, uncomplicated, profitable customer. They also allow lenders to keep interest rates a little lower by avoiding bad debtors.

In your case there seems to have been a mistake. If it's true that you have paid off your debt then the furniture store needs to update your records and call off their debt collectors. Today.

And for those of us who DO owe money to debt collectors? The lesson is simple. Talk to them. If you owe money to someone the very worst thing you can do is try to avoid it. Talk to them and you might be surprised how reasonable they might be. Most lenders would rather get something back instead of nothing. They'd rather get their money slowly rather than never at all.

How can I spot a scam?

(Several people asked me to post this warning again.)

There aren't many pyramid and Ponzi schemes active right now but you can be sure they'll be here very soon, doing their best to recruit people by promising them vast profits. A few months ago Crowd1 was busy, despite being declared illegal in various countries around the world. You might also remember people desperately trying to recruit others into a "WhatsApp gifting" scam that promised to multiply the money people paid to join. Both were just scams that relied on gullible victims joining and then recruiting multiple levels of victims beneath them.

Here's a simple recommendation. Whenever someone invites you to join their money-making scheme, ask yourself WHY they're inviting you. If they've found a way of making money, why are they sharing it with you instead of keeping it to themselves? The answer is very simple. Anyone inviting you to join their scheme is trying to make money FROM you, not WITH you.

Another clue is products. Real businesses have products and services. Scams don't. Or if they do, or they only pretend to have them, but they don't really matter. They are primarily interested in recruiting other people and then getting them to recruit even more. You'll often hear the promoters of these schemes defend themselves by insisting their scheme isn't a pyramid scheme because there are products. Others will say it's legitimate because anyone can earn more than the people above them in the pyramid. That's all excuses. What matters most is the word "primarily". Section 9 of the Consumer Protection Act says that if "participants in the scheme receive compensation derived primarily from their respective recruitment of other persons as participants" then it's a pyramid scheme. It's not difficult.

Then there's the Bitcoin angle. As I've said before, Bitcoin is a legitimate but very high-risk cryptocurrency that is a fascinating vision of how money might work in the future. However, it must never be seen as an investment and it's surrounded by a huge number of scams, pyramid schemes and Ponzi schemes. A good example was BitClub Network, whose founders are being prosecuted in the USA for running a scam that stole $722 million from victims around the world. That actually had no connection to Bitcoin at all, it was just an enormous Ponzi scheme and there were plenty of victims in Botswana.

The simplest lesson is to be skeptical. Don't believe anyone who claims you can make large amounts of money with little effort or just by recruiting other people. Anyone who claims this is either lying, deluded, na├»ve or desperate. Don't believe it! 

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